Correlation Between Douglas Emmett and Spyre Therapeutics

Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Spyre Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Douglas Emmett and Spyre Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Douglas Emmett and Spyre Therapeutics, you can compare the effects of market volatilities on Douglas Emmett and Spyre Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Douglas Emmett with a short position of Spyre Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Spyre Therapeutics.

Diversification Opportunities for Douglas Emmett and Spyre Therapeutics

0.77

Correlation Coefficient

Douglas Emmett  Spyre Therapeutics

Poor diversification

The 3 months correlation between Douglas and Spyre is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics and Douglas Emmett is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Douglas Emmett are associated (or correlated) with Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Douglas Emmett and Spyre Therapeutics

Considering the 90-day investment horizon Douglas Emmett is expected to generate 0.61 times more return on investment than Spyre Therapeutics. However, Douglas Emmett is 1.65 times less risky than Spyre Therapeutics. It trades about -0.07 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about -0.1 per unit of risk. If you would invest  1,766  in Douglas Emmett on December 19, 2024 and sell it today you would lose (173.00) from holding Douglas Emmett or give up 9.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Douglas Emmett  vs.  Spyre Therapeutics

Douglas Emmett

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Spyre Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Douglas Emmett and Spyre Therapeutics

The main advantage of trading using opposite Douglas Emmett and Spyre Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Spyre Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Spyre Therapeutics will offset losses from the drop in Spyre Therapeutics' long position.

The idea behind Douglas Emmett and Spyre Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.